The effectiveness of retail loyalty programmes
Retail loyalty programmes had an effect on a customer's relationship with the brand, but South Africa was way behind the rest of the world in loyalty programme membership, the annual SAMRA conference was told this week.
Brent Adams and Cecile Diener of Research Surveys questioned the effectiveness of retail loyalty programmes in their presentation.
Membership of retail loyalty programmes in South Africa are 5 - 10% of shoppers, however, SA lags far behind compared to international standards where 75% of US shoppers are members of loyalty programmes. South African members are: higher LSM, higher purchasing power and more likely to benefit from such programmes.
What is available in SA? Companies such as Infinity and MySchool manage loyalty programmes on behalf of retailers; there are retailers own programmes: Clicks and Woolworths are the biggest; and then there are programmes like Edgars Club which is a multi-partner loyalty programme.
The largest and most widely used loyalty programme in SA is Clicks: no joining fee, easy to use, makes sense for customers. It also worked for the group as it enabled them to keep customer spending up even when the trend was down.
Consolidate purchasing
Exclusive Books Fanatics was rated number one recently in the industry. It is a way for this retailer to consolidate purchasing at their store.
The multi-partner programmes such as MySchool and Infinity allow customers to earn points at a much faster rate.
The financial and business implications of running these programmes are quite significant, however, and start ups internationally can cost as much as $20 - 30 million.
The researchers analysed the business implications (inputs vs outputs). Research has indicated that there is an increase in sales due to loyalty programmes. An added advantage is collating customer data, which should be used by marketers to customize data and reach clients.
Brand relationship implications
The researchers found that loyalty programmes do affect customer behaviour and the relationship a customer has with a store brand.
"Marketers should possibly 'get with the programme'," Adams and Diener say, encouraging retailers to investigate the effectiveness of loyalty programmes fully in the South African context.
